Garry Kaufman Air Pollution Control Division

 Background on Oil and Gas Air Regulation in Colorado  Basis for Additional Air Quality Requirements for Oil and Gas Sources  Proposed Revisions  Regulatory Process  Summary of Key Points 2

 Colorado has been a national leader in regulating air emissions from oil and gas production sector  2004 Rulemaking to reduce VOC emissions from Oil and Gas Sector in the Denver Metro/North Front Range as part of Early Action Compact  2006 update to 2004 rules and adoption of new rules with statewide applicability 3

 2008 Ozone Action Plan to address non- compliance with Ozone NAAQS  2012 partial adoption of NSPS OOOO ◦ Partial adoption reflected concerns about permitting burdens that would occur with full adoption ◦ In connection with partial adoption the AQCC directed the Division to consider full adoption of NSPS OOOO, as well as other improvements to Colorado’s oil and gas emission regulations. 4

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January 25,

 Oil and Gas operations significantly contribute to air emissions in Colorado  Oil and Gas emissions impact multiple areas across the state  Future development opportunities will likely increase oil and gas air emissions, particularly in Weld County  Absent additional requirements, oil and gas emissions are expected to increase while VOC emissions from other sectors are expected to decrease  Oil and Gas sector is one of several contributors to NO x emissions ◦ Significant NO x emission reductions over the next 5 years due to Regional Haze rules and vehicle fleet turnover

10  Revisions to reporting and permitting ◦ Regulation Number 3  NSPS OOOO full adoption ◦ Regulation Number 6, Part A  Oil and gas emission reduction strategies ◦ Regulation Number 7

 Expand control requirements for storage tanks ◦ Lower control threshold from 20 tons per year to 6 tons per year ◦ Include crude oil and produced water storage tanks ◦ Require controls during the first 90 days of production statewide  Improve capture of emissions at controlled tanks ◦ Clarify that controlled tanks must be operated without venting to the atmosphere ◦ Establish requirements for Storage Tank Emission Management systems (STEM)  Capture performance evaluation  Certified design to minimize emissions  Extensive instrument based monitoring  Continual improvement 11

 Establish LDAR requirements for compressor stations and well production facilities ◦ Frequent monitoring using Method 21 or infra-red (IR) cameras  Tiered monitoring schedule to focus on the highest emitting facilities and reduce the burdens on smaller facilities  Would establish the most comprehensive leak detection program for oil and gas facilities in the nation ◦ Repair schedule for identified leaks ◦ Recordkeeping and reporting requirements 12

 Expand control requirements for glycol dehydrators ◦ Lower control threshold from 15 tons per year to 6 tons per year ◦ More stringent threshold for facilities near populated areas  Require capture or control of the gas stream at well production facilities  Establish requirements to minimize emissions during well maintenance  Expand pneumatic controller requirements statewide  Require auto-igniters on all combustion devices  Full adoption of NSPS OOOO 13

 Hearing Scheduled for February 19-21, 2014  Interested persons can participate in two ways ◦ Participate as a party ◦ Provide public comment  Participation as a party requires involvement throughout the pre-hearing process ◦ Submit request for party status: December 13, 2013 ◦ Status Conference: December 19, 2013 ◦ Pre-Hearing Statements: January 6, 2014 ◦ Pre-Hearing Conference: January 17,

 Individuals or groups can provide written comments prior to the hearing  Alternatively oral or written comments can be provided at the hearing on February 19, 2014 ◦ Time limitation on oral comments ◦ Unlike parties, individuals or groups providing public comments cannot offer alternative proposals  Hearing will take place at the Aurora Municipal Center, East Alameda Parkway 15

 Wide range of regulatory requirements aimed at reducing volatile organic compound (VOC) and methane emissions from the oil and gas production sector  Collaborative effort involving the Division, industry and environmental group stakeholders 16

 Significant emission reductions from the oil and gas sector ◦ Approximately 92,000 tons per year of VOC ◦ Tens of thousands of tons of methane  Cost-effective requirements ◦ Calculated cost per ton of VOC reduced ranges from $176 to $818 per ton ◦ Overall cost effectiveness for the entire package is approximately $300 per ton of VOC reduced 17

 Expands Colorado’s existing program and establishes innovative new strategies that address each of the most significant sources of hydrocarbon emissions from the oil and gas production sector  Maintains Colorado’s leadership role in regulating air emissions from oil and gas production  Establishes a rigorous set of requirements to ensure responsible development of Colorado’s oil and gas resources 18